Choose the Right Tools for Internal Control Reporting: Pick Internal Control Software for Changing Business Conditions

By Winters, Bruce I. | Journal of Accountancy, February 2004 | Go to article overview

Choose the Right Tools for Internal Control Reporting: Pick Internal Control Software for Changing Business Conditions


Winters, Bruce I., Journal of Accountancy


Time is running out for many businesses to begin the complex process of complying with section 404 of the Sarbanes-Oxley Act of 2002, which tightened internal control and financial reporting requirements. (See "Impact of Section 404," page 36.)

This article is intended for readers in both industry and public accounting who seek, or need to offer, advice on selecting software--based on the extent to which a company already has compliance systems in place--for meeting section 404's requirements. Although it is not a detailed buyer's guide, it describes the features of specific software categories and thus can serve as a practical guide to what's available in the market and what to look for when examining software for employers and clients and discussing products with vendors.

CPAs can play a valuable role in helping companies choose software tools whose functions include supporting compliance and also enhancing communication with investors, employees and regulators, making financial statements clear and easier to analyze and increasing efficiency by, for example, eliminating redundant or obsolete controls and improving workflow. Acting as a technical adviser on financial internal controls design, financial processes and transaction flows, the CPA can help a client or employer answer three difficult but important questions:

* Is it better to design a compliance program for the short term (one year or less) or a more sustainable one for the long term?

* Which software tools are most capable of fostering complete, effective and sustainable compliance in a given business situation?

* What other investments (new policies and procedures, training and ethics programs, for example) are necessary to achieve section 404 compliance and also to take full advantage of the software chosen?

Companies are eager to contain the already spiraling costs of complying with Sarbanes-Oxley. Some are overhauling their business processes and integrating them into enterprise-wide systems. They also are installing software that produces always-up-to-date business process documentation in terms managers, investors and lenders can understand. This software enables companies to refine their financial controls, improve both their timing and public communication of key company events and provide more detailed evaluations of business results.

ASK (AND UNDERSTAND) BEFORE BUYING

CPAs can save clients or employers time and money by strongly recommending the selection of software be based on the criteria listed below in order of importance.

* The software tool's most important functions, not its minor features.

* The vendor's viability as a going concern.

* The vendor's support plans and the software's position in its product line.

* The product's ongoing compatibility with the company's operating systems and its scalability.

* Whether the tool has a Web-based interface and employees can access it online without installing software on their individual PCs.

* Whether customization of the product is available or required.

* The availability of suitable vendor-supplied implementation services.

* The level of training the vendor provides.

* The extent of integration with other tools--for example, how proprietary is the database, and can users easily link it to other programs?

* Price.

* Maintenance, support and upgrade costs (direct and indirect--for example, hardware and staff).

* Availability of information on any infrastructure and operating system changes or updates that could become necessary.

BUYER, KNOW THYSELF

The extent to which a company has progressed in building a strong control environment will dictate what tools it needs to buy and when. CPAs can use an internal controls maturity framework to help companies determine whether their existing or proposed controls for a given activity or process are rigorous enough to manage related risks and that they are sufficiently documented for review by auditors who must assess section 404 compliance. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Choose the Right Tools for Internal Control Reporting: Pick Internal Control Software for Changing Business Conditions
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.